Meanwhile, questions have been raised about the accuracy of the police
intelligence that led to the raid on the block of flats occupied by de
Menezes. It was initially suggested that the flat was connected to the man
known as Hussein Osman, who was arrested in Italy. On the Saturday after the
shooting, officers raided the flat in a high-profile operation watched by the
world's media. As a result, a man, identified only as 'C', was arrested 'on
suspicion of the commission, instigation or preparation of acts of
terrorism'. But he was released on 30 July with no charge, raising the
possibility that the flats had no connection with the bombings.

Also from the Observer article:

Senior sources in the Metropolitan Police have told The Observer that members
of the surveillance team who followed de Menezes into Stockwell underground
station in London felt that he was not about to detonate a bomb, was not armed
and was not acting suspiciously. It was only when they were joined by armed
officers that his threat was deemed so great that he was shot seven times.

Sources said that the surveillance officers wanted to detain de Menezes, but
were told to hand over the operation to the firearms team.

The two teams have fallen out over the circumstances surrounding the incident,
raising fresh questions about how the operation was handled.

A police source said: 'There is no way those three guys would have been on the
train carriage with him [de Menezes] if they believed he was carrying a
bomb. Nothing he did gave the surveillance team the impression that he was
carrying a device.'